Crypto Market Rally Stalled as Global Bond Yields Surge

The crypto market's bullish run in the final quarter of 2024 has been abruptly halted by a sharp rise in government bond yields across the globe.

The U.S. 10-year Treasury yield, a global benchmark, has climbed to 4.70%, nearing a multi-year high and marking a substantial increase of over 100 basis points since the Federal Reserve initiated interest rate cuts in September. The situation is even more pronounced in the U.K., where the 30-year Gilt yield has reached 5.35%, its highest level since 1998, representing a 105-basis-point jump since the Fed's rate cuts began.

This surge in interest rates is not confined to the U.S. and U.K. Germany, Italy, and Japan have also witnessed significant increases in their bond yields. Notably, Japan's 10-year JGB yield has risen to 1.18%, its highest in nearly 15 years, despite remaining relatively low.

While rising yields had little impact on crypto prices earlier this year, with Bitcoin and other digital assets reaching record highs in early-mid December, the recent market downturn tells a different story. Bitcoin has declined by over 10% from its record high of over $108,000 set just three weeks ago, and many other major cryptocurrencies have experienced even larger losses.

China stands as a notable exception, with yields falling sharply amid concerns over deflation. According to The Kobeissi Letter, China has been grappling with its longest period of deflation since 1999.